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Chapter 1 Introduction

Chapter 1
Introduction

1.1 The Project



The Mackenzie Gas Project is a proposal to produce and transport natural gas and natural gas liquids from the three largest discovered onshore natural gas fields in the Mackenzie Delta area. Natural gas from the Niglintgak, Taglu and Parsons Lake fields would travel via the Mackenzie Valley Pipeline from Inuvik, Northwest Territories, to northwestern Alberta and on to southern markets. Natural gas liquids would be separated from the natural gas at a gas processing facility near Inuvik (Inuvik Area Facility) and transported via a smaller pipeline to Norman Wells, Northwest Territories, where it would connect to the existing Enbridge Pipelines (NW) Inc. Norman Wells Pipeline
(see Figure 1-1

In October 2004 the National Energy Board received the following applications for the construction and operation of the Mackenzie Gas Project:

  • the development of three natural gas fields—Niglintgak, Taglu and Parsons Lake development fields—applied for under section 5.1 of the Canada Oil and Gas Operations Act;
  • the Mackenzie Gathering System, including 189.2 kilometres of upstream gathering pipelines, the Inuvik Area Facility, and a 457.2 kilometre natural gas liquids pipeline from the Inuvik Area Facility to Norman Wells, all applied for under paragraph 5(1)(b) of the Canada Oil and Gas Operations Act;
  • the 1195.8 kilometre long Mackenzie Valley Pipeline, including three compressor stations, a heater station and associated pipeline facilities to transport natural gas from the Inuvik Area Facility to northwestern Alberta, applied for under section 52 of the National Energy Board Act. This pipeline would connect with the existing NOVA Gas Transmission Ltd. system in Alberta; and
  • an order, pursuant to Part IV of the National Energy Board Act, approving the toll and tariff principles that are to apply to service on the Mackenzie Valley Pipeline.

Did you know?

Pipelines in the North

If the Mackenzie Gas Project proceeds it would be by far the largest pipeline system to be constructed and operated in Canada's North, although it would not be the first. The Canol Pipeline, built during World War II, moved crude oil from Norman Wells to Whitehorse, and in the mid-1980s, Enbridge Pipelines (NW) Inc.

built the Norman Wells Pipeline from Norman Wells to Zama, Alberta. Several natural gas pipelines have been built from southern Yukon and the Northwest Territories into British Columbia and Alberta in the last half century and, in the late 1990s, the Ikhil Pipeline was built to supply Inuvik with natural gas.


 

Figure 1-1 Overall project map

Figure 1-1 Overall project map The Mackenzie Valley Pipeline is designed to transport approximately 34.3 Mm³/d (1.2 Bcf/d) of natural gas with three compressor stations in operation.

The proponents of the Mackenzie Gas Project are Imperial Oil Resources Ventures Limited, Mackenzie Valley Aboriginal Pipeline Limited Partnership, Imperial Oil Resources Limited, ConocoPhillips Canada (North) Limited, Conoco Phillips Northern Partnership, ExxonMobil Canada Properties and Shell Canada Limited as managing partner of Shell Canada Energy, (collectively, the Proponents).

The capital cost of the Mackenzie Gas Project is estimated at $16.2 billion (2006$). It is planned to be in operation by the end of 2018, based on the start of construction in late 2014.


Figure 1-2 Development fields and upstream gathering pipeline

Figure 2-1 Map of the producing fields

1.2 Project description

1.2.1 Niglintgak field

Shell Canada Limited (Shell) applied for approval of a Development Plan under section 5.1 of the Canada Oil and Gas Operations Act for the Niglintgak field on 20 October 2004.

The Niglintgak Significant Discovery Licence SDL019 is located about 120 kilometres northwest of Inuvik and 85 kilometres west of Tuktoyaktuk and lies within Kendall Island Bird Sanctuary in the Mackenzie Delta (see Figure 1-2).

The proposed production facilities include:

  • six to twelve production wells located on three well pads;
  • a system of above-ground flow lines; a gas conditioning facility located in the Kumak Channel;
  • a disposal well; and
  • infrastructure including an emergency shelter and helipads.

Construction is planned over four winter seasons from 2014 to 2018 with operations to commence in 2018 and continue for about 25 years. The initial capital expenditure for drilling and facilities is expected to be $800 million (2006$).


1.2.2 Taglu field

Imperial Oil Resources Limited applied for approval of a Development Plan under section 5.1 of the Canada Oil and Gas Operations Actfor the Taglu field on 7 October 2004.

The Taglu Significant Discovery Licence SDL063 is located about 120 kilometres northwest of Inuvik and 70 kilometres west of Tuktoyaktuk in the Mackenzie Delta (see Figure 1-2).

The proposed production facilities include:

  • up to 15 production wells drilled from a single pad;
  • one or two disposal wells;
  • a gas conditioning facility;
  • associated infrastructure including pads and foundations;
  • a barge landing site;
  • an airstrip and helicopter pad;
  • buildings; and
  • a water treatment system.

Did you know?

Nominal pipes size (NPS)

Nominal pipe size (NPS) is a set of standard pipe diameters used for pressure piping in North America measured in inches.

Approximate conversions to SI (metric) for the pipes in this project are as follows:

Nominal pipe size Approximate pipe diameter
NPS 10 250 mm
NPS 16 400 mm
NPS 18 450 mm
NPS 26 650 mm
NPS 30 750 mm
NPS 32 800 mm

Construction is planned to take place from 2014 to 2018 with operations commencing in 2018. The estimated initial capital expenditure for developing the field is $1,750 million (2006$) with an additional $800 million for future compression and infill wells.

1.2.3 Parsons Lake field

ConocoPhillips Canada (North) Limited applied on behalf of itself and ExxonMobil Canada Properties for approval of a Development Plan pursuant to section 5.1 of the Canada Oil and Gas Operations Actfor the Parsons Lake field on 7 October 2004.

The Parsons Lake Significant Discovery Licences SDL032 and SDL030 are located about 70 kilometres north of Inuvik and 55 kilometres southwest of Tuktoyaktuk, to the east of the Mackenzie Delta on Tuktoyaktuk Peninsula (see Figure 1-2).

The proposed production facilities include:

  • a north pad with 9 to 19 production wells;
  • disposal wells and a gas conditioning facility;
  • a south pad with three to seven production wells;
  • flow lines; and
  • support infrastructure including an all-weather airstrip.

Construction is planned to take place from 2014 to 2018 with operations commencing in 2018 and expected to continue for 25 or 30 years. The estimated initial cost for developing the field is $1,200 million (2006$) with an additional $350 million for future compression and infill wells.

1.2.4 Mackenzie Gathering System

Imperial Oil Resources Ventures Limited applied on behalf of itself, Shell Canada Limited, ConocoPhillips Canada (North) Limited, and ExxonMobil Canada Properties for authorization under paragraph 5(1)(b) of the Canada Oil and Gas Operations Act for the Mackenzie Gathering System on 7 October 2006.

The Mackenzie Gathering System includes:

  • approximately 190 kilometres of NPS 16, NPS 18, NPS 26 and NPS 32 gathering pipelines to transport production from the Niglintgak, Taglu and Parsons Lake natural gas fields to the Inuvik Area Facility;
  • the Inuvik Area Facility, which would process production from the three development fields;
  • an approximately 457 kilometre long NPS 10 natural gas liquids pipeline from the Inuvik Area Facility to Norman Wells; and
  • block valves, pigging facilities, and meter stations for the upstream gathering pipelines and the natural gas liquids pipeline.

On 12 October 2007 MGM Energy Corp. executed a Capacity Request Agreement indicating its intent to become either an owner in the Mackenzie gas gathering and processing facilities or to contract for firm capacity in the facilities for an identified volume of 5.66 Mm³/d (200 MMcf/d). A supply of 2.83 Mm³/d (100 MMcf/d) from a field known as MGM East would be delivered to a receipt point located at Taglu, and a supply of 2.83 Mm³/d (100 MMcf/d) from a field known as MGM West would be delivered to a receipt point located at Niglintgak.

MGM Energy Corp. was the only third-party shipper to make a volume commitment to the Mackenzie Gas Project during the course of the proceedings. MGM Energy Corp. did not make a capacity request for space on the Mackenzie Valley Pipeline.

The Mackenzie Gathering System would have the capacity to deliver about 30.9 Mm³/d (1.1 Bcf/d) of gas to the Mackenzie Valley Pipeline and to transport about 4000 m³/d (25,200 Bbl/d) of natural gas liquids from the Inuvik Area Facility to Norman Wells. The approximate capital cost of the Mackenzie Gathering System is $3,500 million (2006$). It is scheduled to be in service in 2018.

1.2.5 Mackenzie Valley Pipeline

Imperial Oil Resources Ventures Limited applied on behalf of itself, Mackenzie Valley Aboriginal Pipeline Limited Partnership, Shell Canada Limited, ConocoPhillips Canada (North) Limited, and ExxonMobil Canada Properties for a certificate of public convenience and necessity pursuant to section 52 of the National Energy Board Actand an order pursuant to Part IV of the National Energy Board Actapproving the toll and tariff principles that would apply to the Mackenzie Valley Pipeline (see Figure 1-3). Subsequently, ConocoPhillips Canada (North) Limited's interests in the Mackenzie Valley Pipeline were transferred to ConocoPhillips Northern Partnership.

The Mackenzie Valley Pipeline includes:

  • approximately 1196 kilometres of buried NPS 30 pipeline from the Inuvik Area Facility to a point of interconnection with the NOVA Gas Transmission Ltd. system just south of the Alberta-Northwest Territories boundary;
  • three compressor stations, one at Great Bear River to be installed initially and two others at Loon River North and River Between Two Mountains to be installed when additional shipping commitments are received;
  • the Trout Lake heater station to be installed when additional shipping commitments are received;
  • a meter station located at the Inuvik Area Facility; and
  • a pig receiver and block valve just south of the Alberta-Northwest Territories boundary.

As applied for, the Mackenzie Valley Pipeline has a design capacity of 27.3 Mm³/d (964 MMcf/d) with one compressor station and 34.3 Mm³/d (1.2 Bcf/d) with three compressors and one heater station in operation. The design capacity is expandable to 49.8 Mm³/d (1.8 Bcf/d) with a total of 14 compressor stations in operation. The Proponents propose initially to construct a single compressor station and no heater station. The approximate capital cost of the Mackenzie Valley Pipeline is $7,050 million (2006$) with one compressor station at the Great Bear River. The Loon River North and River Between Two Mountains compressor stations and the Trout Lake heater station would add approximately $800 million to the capital cost. The Mackenzie Valley Pipeline is scheduled to be in service in 2018.


Figure 1-3 Mackenzie Valley Pipeline and natural gas liquids pipeline

Figure 1-3 Mackenzie Valley Pipeline and natural gas liquids pipeline

1.2.6-Construction schedule

The Proponents indicated that the earliest they would make their final decision on whether or not to proceed with the Mackenzie Gas Project would be at the end of 2013, subject to regulatory approval and receipt of required permits. Should the project proceed as proposed, the detailed design and construction phases of the pipeline and related facilities would commence by 2014 and would be expected to continue into 2018. It would be during this phase that the project activities would have the greatest interaction with the northern communities and the natural environment. The Proponents submitted that this phase of the project would also see the completion of the following activities in the project area:

  • field investigation and testing programs to provide data for detailed design;
  • procuring and mobilizing materials, equipment, goods and services;
  • ongoing consultation with the northern communities;
  • developing and constructing infrastructure support, such as borrow sites;
  • drilling and completing wells at the development fields; and
  • constructing production facilities and flow lines at the development fields.

The winter months (mid-October to late April) would be the primary time for pipeline construction activities. The summer months (May to October) would be used for mobilizing equipment, materials and fuel to the sites to support the winter construction. Infrastructure development and facility fabrication and construction are anticipated to proceed year round. A schedule proposed by the Proponents is provided in Figure 1-4.

Onsite activities are proposed to commence in early summer 2014 with site preparation and initial development of some construction support infrastructure (barge landing facilities, small construction camps, borrow sites, material

staging and fuel storage sites). The winter of 2014 -2015 would see the first sections of the pipeline right of way surveyed, cleared and graded and further development of borrow sites, staging and tank sites, barge landing sites and the main construction camps. The Proponents expect these activities to extend into the summer of 2015. During the summer of 2015, pipeline materials, equipment, camps and fuel would be mobilized to site for the first pipe laying season in the winter of 2015-2016.

The Proponents propose to divide construction of the pipeline into 12 construction spreads (see Figure 1-5). Each spread is expected to require an initial winter season for site

preparation, a subsequent winter season for construction of the pipeline and a third winter season for final clean-up. Work would occur sequentially (clearing crews would be followed by pipeline installation and clean-up crews) proceeding in one direction along the spread with minor exceptions at some locations due to weather, construction camp locations or watercourse crossings.

Clearing activities and horizontal directionally drilled water course crossings are expected to be completed on all spreads in the first two winter construction seasons. Commissioning and start-up activities would be scheduled to commence in 2018 after the final

Figure 1-4 Proposed construction schedule for Mackenzie Gathering System and Mackenzie Valley Pipeline

Figure 1-4 Proposed construction schedule for Mackenzie Gathering System and Mackenzie Valley Pipeline

Figure 1-5 Proposed construction spreads

Figure 1-5 Proposed construction spreads season of pipeline installation. Reclamation and demobilization of camps, equipment and materials are expected to extend into the fall of 2019.

Construction of the station facilities (Inuvik Area Facility, metering facility and Great Bear River Compressor Station) is proposed to commence in the winter of 2014-2015 with survey, clearing and grading of the facility sites. Gravel pads would be installed the following summer. The Proponents submitted that the pile foundations for the facilities would be drilled and installed during the winter and summer of 2016. Construction of the facility modules would occur off site and the Proponents anticipate mobilizing the modules to the facility sites to finalize assembly in the winter of 2017-2018. The Proponents anticipate concluding facility construction in the summer of 2018.


Did you know?

Definitions

Permafrost – soil or rock that remains at or below 0ºC for at least two consecutive years.

Continuous permafrost – permafrost occurs beneath more than 90 percent of land area. Taliks may exist beneath river channels, lakes and in other localized areas. Extensive

Extensive discontinuous permafrost – permafrost occurs beneath 65 to 90 percent of land area.

Intermediate discontinuous permafrost – permafrost occurs beneath 35 to 65 percent of land area.

Sporadic discontinuous permafrost – permafrost occurs beneath 10 to 35 percent of land area.

Isolated patches of permafrost – permafrost occurs beneath less than 10 percent of land area.

Talik – a pocket of unfrozen ground in a permafrost area, often beneath a lake or river.

Muskeg – a bog or peatland typically containing Sphagnum moss, willows and stunted black spruce trees. Muskeg can reach depths of 30 metres or more and is a significant impediment to transportation and construction during the summer.

1.3 Project setting

1.3.1 Project environment

The Mackenzie Delta is located above the Arctic Circle and is approximately 14 250 square kilometres in area; more than twice the size of Prince Edward Island. The Mackenzie Delta is the outlet of the Mackenzie River, which flows for approximately 1800 kilometres from Great Slave Lake in the Northwest Territories to the Beaufort Sea. The Mackenzie River is Canada's longest, and one of the world's largest, river systems. Along its route, the Mackenzie River picks up and carries a large amount of silt that settles out in the Mackenzie Delta, forming an extensive network of channels, islands, lakes and ponds. The Canadian North has more lakes than the rest of the world combined and more than 25,000 of them are in the Mackenzie Delta.

The proposed Mackenzie Gas Project stretches over 1000 kilometres from the Mackenzie Delta to northwestern Alberta and generally follows the Mackenzie Valley. The rivers and lakes of the region, including the Mackenzie Delta, support

41 species of fish, including Arctic grayling, northern pike, longnose sucker, slimy sculpin and lake chub. Wildlife populations found in the project area include grizzly bear, polar bear, barren-ground and woodland caribou, moose, marten, lynx, beaver, beluga whale, bowhead whale, ringed seal, and many bird species. On the northeast tip of the Mackenzie Delta, still more than 2000 kilometres from the North Pole, lies Kendall Island Bird Sanctuary. The Sanctuary is home to more than 90 species of birds, including the lesser snow geese, the tundra swan and other migratory birds.

Permafrost lies beneath much of the project area. The Niglintgak and Taglu fields are located in areas of discontinuous permafrost in the Mackenzie Delta (see Figure 1-6). The Parsons Lake field is located on higher ground to the east of the Mackenzie Delta, where the permafrost is continuous. North of the Inuvik Area Facility, the upstream gathering pipelines would be buried for the most part in continuous permafrost. South of the Inuvik Area Facility, the Mackenzie Valley Pipeline and natural gas liquids pipeline would leave the continuous


Figure 1-6 Permafrost regions

Figure 1-6 Permafrost regions permafrost zone and enter the discontinuous permafrost zone. South of Fort Simpson the Mackenzie Valley Pipeline would enter the sporadic permafrost zone.

The soil in the Mackenzie Delta region is thinly layered and formed from river deposits of silt, sand and gravel. The delta's low-lying geography exposes both the Niglintgak and Taglu fields to regular flooding and occasional storm surges from the Beaufort Sea.

Most of the land along the pipeline route is flat and covered with muskeg, except for a few areas with rolling hills and other features. The Mackenzie Gas Project would cross more than 600 watercourses that vary from small, seasonal streams to large rivers. The vegetation along the route changes from the treeless tundra in the Mackenzie Delta to the boreal forest in Alberta. Large areas of forest in the Mackenzie Valley have burned in recent years. Rare plants and uncommon vegetation types are found throughout the region. Some plants are used for traditional purposes, such as food, medicine, ceremonies or materials.


Figure 1-7 Land claim regions of the Mackenzie Valley

Figure 1-7 Land claim regions of the Mackenzie Valley

1.3.2 Social, cultural and economic setting

The Proponents identified up to 32 communities in the Northwest Territories and in northwestern Alberta that could be affected by the Mackenzie Gas Project (see Table 1-1). The 26 communities in the Northwest Territories are home to about 35,000 residents and are found in four regions—Inuvialuit Settlement Region, Gwich'in Settlement Area, Sahtu Settlement Area, and the Dehcho Region. The six communities in northwestern Alberta are home to about 7,000 residents and are located in the Dene Tha' First Nation region.

The population in the four regions of the Northwest Territories in the Mackenzie Delta and along the Mackenzie Valley where the Mackenzie Gas Project would be built is about 12,000. More than 75 percent of these people are Aboriginal. Most live in communities smaller than 1,000 people. About half of the total Northwest Territories population and about 40 percent of the northwestern Alberta population is Aboriginal.


Table 1-1 Potentially affected communities

In the project area, some land claims have been settled. The first was the Inuvialuit Final Agreement in 1984. In 1992, the Gwich'in signed an agreement that established the Gwich'in Settlement Area. In 1994 the Sahtu Dene and Metis Land Claim Settlement Act came into effect. There are ongoing negotiations with the Dehcho (see Figure 1-7).

The cost of living is higher in more northern communities due to their distance from the source of supply for basic goods. Based on a 2000 survey, the cost of living in the Mackenzie Delta was 25 percent to 115 percent higher than in Edmonton, Alberta, depending on the remoteness of the community. Country foods such as caribou and moose are a large part of the diet for many Aboriginal people. Traditional gathering and harvesting supplement earned incomes and help offset the high cost of living. In most communities, government-related employment is the largest and most stable economic influence.

Area Region Community
Northwest Territories Inuvialuit Settlement Region Aklavik
Tuktoyaktuk
Holman
Paulatuk
Sachs Harbour
  Gwich'in Settlement Inuvik
Fort McPherson
Tsiigehtchic
  Sahtu Settlement Area Norman Wells
Fort Good Hope
Deline
Tulita
Colville Lake
  Dehcho Region Fort Simpson
Fort Providence
Fort Liard
Wrigley
Nahanni Butte
Trout Lake
Jean Marie River
Kakisa
Hay River Reserve
West Point Reserve
  Industrial and commercial centres Yellowknife
Hay River
Enterprise
Northwestern Alberta Dene Tha' First Nation Chateh
Meander River
Bushe River
  Industrial and commercial centres High Level
Rainbow Lake
Zama City

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Date Modified:
2014-02-13